New World wine markets
Conclusions / Recommendations
Bibliography Is the global market economy broken
This report has been compiled to advise Diageo’s on their further growth. Diageo is a British multinational alcohol company they bring to consumers an array of beverage across the spirits, wine, and beer categories. In the spirit market its main competitors are Period Ricard also, Bacardi and Brown-Ferman. The competition for Diageo in the UK is Coors Brewing, while in Africa, SAB Millier and Heineken are there main competitors. The wine market is fragmental with many producers and distributors. This report will explore Diageo’s current position in the international market, It will also explore the organisation and strategy of international business, Before going on to examine the two main areas’ where further expansion is possible, The first being the emerging markets, the developing world markets are becoming saturated and many global companies are turning to emerging economies e.g.: Brazil, India Indonesia China and Mexico as key area of expansion. London & Hart, (2004) noted “ one way to enter the emerging market is to focus on the wealthy elite at the top of the economic pyramid, using product and business models similar to those in the developed world.” The second, being the possibility of extending their presence into the premium New World wine markets. Taking its rivals head on, they could do this through mergers and acquisitions as consolidation continues to be solid amongst wine firms, while still continuing to compete on the basis of quality, price and consumer loyalty. 2 Current position
Diageo’s current market position was won through a series of mergers and acquisitions. “Diageo was formed in 1997 from the merger of Guinness and Grand Metropolitan” The Independent (1997). According to Paul Walsh Diageo “has a strong position in today’s market-place” trading in some 180 countries around the world and is listed on both the London Stock Exchange (DGE) and the New York Stock Exchange. Diageo is also ranked 18 out of 100 in FTSE with over £23 billion market capitalization.
This Graph shows a percentage break down of sales and from it we can see that Diageo has currently only a 4% market share in the wine market, however Diageo in the premium spirits market are global leaders, by volume and revenue, owning 8 of the top 20 spirits brands. The company is innovative; in 2009 they had in the U.S. spirits market.4 out of the 5 top product launches. They claim 28% percentage of the international spirits market compared to its competitors. Diageo have also gained a share of the beer market in Great Britain and Ireland, which according to Walsh (2010) “it’s a difficult market to break into”. By using a single distributor in each state Diageo is streamlining its North American supply chain, by doing this; they will be able to work closely with the distributor to improve the supply chain this could then replicate Coca-Cola’s relationship with its distributors. Diageo in Europe (including Russia), mainly distributes through solely owned distributors. For distribution in other countries Diageo relies on local distributors with good connections to local retailers. Diageo occasionally markets and take on the role of distributor for other company’s brands. An example their joints venture with Moet-Hennessey, Jose Cuervo Tequila, and Kettle One Vodka. Diageo have created a strong branding for its products. Its high reputation can account for its high level of customers’ loyalty and satisfaction. According to Parsons (2012) Diageo has turn its attention to...
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